Tax deductions for property investors

Your number one goal as a property investor is to make money, and maximising tax deductions is a big part of this.

However, even if you know all the ins and outs of tax breaks for your own home, there are important differences to keep in mind when it comes to tax deductions for rental properties.

Short-term

According to the Australian Taxation Office (ATO), there are certain expenses that can be claimed on your taxes straight away.

These include the purchase of a rental property, the purchase of land to build a rental property on, the purchase of a depreciating asset for the property or the finance to renovate a property.

In addition to this, you can also claim deductions for the costs of repair and maintenance on your rental property.

Costs that come with tenants, such as the preparation of a lease agreement, can be immediately deducted as well.

For investors looking to claim deductions on expenses for the year they are incurred, it's essential to keep these guidelines in mind.

Long-term

According to the ATO, certain deductions can be claimed over a number of years.

These include the cost of depreciating assets, structural improvements and borrowing costs.

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It's also important to understand which expenses cannot be claimed on your taxes.

For example, any expenses that are not actually incurred by you, such as utility charges paid by your tenants, cannot be claimed.

Also, you cannot claim deductions related to your own personal use of a rental property.

As far as borrowing expenses, you can only claim deductions on the portion of the loan that is used for the rental property, not personal use.

Of course, tax rules can be confusing, so it's always a good idea to seek professional advice when making deductions on your rental property.